Treasury 'exposed public funds' by blindly backing Bank of England's 'expensive and unproven experiments' in boosting the economy

Desperate government attempts to stimulate the economy damned by MPs as 'expensive experiments indemnified with taxpayers' money'

Treasury’s attempts to stimulate growth through new lending have so far failed, claims Public Accounts Committee

Treasury accounts described as 'impenetrable'

The Treasury stands accused of risking billions of pounds taxpayers’ money on the Bank of England’s economy-boosting experiments with little idea of the potential consequences.
An influential group of MPs laid into the Bank of England's hugely controversial money-printing programme, said its flagship lending guarantee scheme had failed and slated the Treasury's account-keeping as ‘impenetrable’.
So far £375billion has been pumped into the UK economy through quantitative easing, which has driven down incomes for pensioners and crippled returns for savers.

Damning: The Public Accounts Committee called government attempts to stimulate the economy 'expensive experiments' (Pictured: Chancellor George Osborne)

But despite the huge costs, the Public Accounts Committee (PAC) said the Treasury had no idea what the risks are – or even how the economy is benefiting.
‘The Treasury has limited understanding of its role in these measures. It has not set out its goals and intended outcomes, and it has limited management information to help it monitor progress, giving the impression of a series of expensive experiments indemnified with taxpayers' money,’ the MPs warned.

The criticisms will make worrying reading for struggling families already facing soaring prices because the Bank of England has failed yet again this month to hit its target inflation ceiling of two per cent.
It could also raise concerns that current economic policies are insufficient to return the country to growth, in the same week leading think tank the Resolution Foundation revealed millions of families may never see their finances recover from the economic downturn.
The verdict was delivered in the cross-party committee's report into the Treasury's performance in the last financial year.
Committee chair Margaret Hodge added that the Treasury’s attempts to stimulate growth through new lending have, so far, not been successful.

Asking the questions: MP Margaret Hodge, chair of the Public Accounts Committee

‘The National Loans Guarantee Scheme achieved just 15 per cent of its intended take-up and has now been superseded by a more generous Bank of England scheme,’ she said. ‘The Treasury needs to be clear what it wants this Bank of England scheme to achieve, and how it intends to monitor it.
‘These measures are characterized by a lack of goals and intended outcomes, with no means of monitoring progress.’
While it is not directly taxpayers' money funding these schemes, it is the public purse that will be hit should they fail.
The Treasury was also rebuked for not getting a grip on spending across Whitehall and ‘impenetrable’ book-keeping.
The department  ‘appears to neglect its role as finance ministry’, Margaret Hodge said. ‘Its own accounts are impenetrable and this committee keeps seeing instances of poor decision making by departments, which the Treasury could and should have prevented.’
The MPs noted that it had managed to cut the public purse's exposure to bank guarantee schemes in the wake of the credit crunch, and was doing better at holding on to key staff.
However, the Government was still facing a £34billion loss on shares in RBS and Lloyds, and there were doubts as to whether the department had ‘sufficient capacity and skills’ to respond to any future banking crisis.
Plans for more job cuts and high turnover of personnel threatened its ‘ability to effectively control the risks it is managing on behalf of the taxpayer’.
‘High staff turnover threatens the Treasury's ability to respond to crises and manage public spending effectively. While staff turnover fell in 2011-12, it is still very high.

Long road to recovery: Living standards could take years to return to pre-crash levels, the Resolution Foundation has predicted

‘Furthermore, the Treasury remains committed to cutting its headcount by a third and there are still very few women at senior levels.’
The Labour MP said the support provided to banks during the credit crunch had helped prevent the banking system from collapsing.
‘We are pleased that the Treasury has successfully withdrawn nearly all of the taxpayer guarantees to banks. But the taxpayer still owns some £66 billion of shares in RBS and Lloyds, a sum which is yet to be recovered,’ she said.
A Treasury spokesman said: ‘The Treasury is focused on its job to support the Government's strategy to deal with the country's debts and rebalance the economy to ensure Britain succeeds in the global race.
‘Over the past two years over a million private sector jobs have been created, the deficit has been reduced by a quarter and interest rates have been at near record lows, benefiting businesses and families.’